Gensource Potash Arranges $4-million Private Placement

Gensource Potash (TSXV:GSP) has engaged Industrial Alliance Securities Inc. as sole agent in connection with a proposed best-efforts marketed private placement for gross proceeds of up to $4-million. The Offering will consist of the sale of up to 27,777,777 common shares in the capital stock of the Company (the “Common Shares”) at a price of $0.09 per Common Share and up to 13,636,363 Common Shares issued on a flow-through basis (the “Flow-Through Shares”) at a price of $0.11 per Flow-Through Share. In addition, the Company has also granted IA an option (the “Agent’s Option”), exercisable up to 48 hours prior to the closing of the Offering, to cause the Company to issue up to an additional 15% of the maximum of the Offering in Common Shares and/or Flow-Through Shares.
The Company intends to use the proceeds from the Offering for drilling, seismic and engineering related to pre-feasibility work for the Lazlo Project, and for the Vanguard Project upon completion of the acquisition with Yancoal Canada Resources Co. Ltd. (“YCR”), as well as for general working capital purposes. The gross proceeds from the sale of the Flow-Through Share portion of the Offering will be used to fund “Canadian exploration expenses” (“CEE”) (within the meaning of the Income Tax Act (Canada) (the “Tax Act”)) related to the Company’s projects in Saskatchewan, and the Company will use its best efforts to ensure that such CEE qualify as a “flow-through mining expenditure”, for purposes of the Tax Act, related to the exploration of the Company’s exploration projects. The Company will renounce such CEE with an effective date of no later than December 31, 2016.
The Offering will take place by way of a private placement to qualified investors in such provinces of Canada as IA may designate, and otherwise in those jurisdictions where the Offering can lawfully be made. The securities to be issued pursuant to Offering will be subject to a statutory fourth month and one day hold period from the Closing Date (as defined herein).
It is expected that the closing of the Offering will occur on or about August 25, 2016 (the “Closing Date”) and is subject to the satisfaction of certain conditions, including receipt of all applicable regulatory approvals including the approval of the TSX Venture Exchange. In consideration for their services, IA will receive a cash commission equal to 8.0% of the gross proceeds of the Offering and compensation warrants to purchase common shares equal to 8% of the total number of Common Shares and Flow-Through Shares sold exercisable for 24 months from the Closing Date at $0.09 per common share, including, in both instances, any proceeds realized on exercise of the Agent’s Option.
Gensource’s President and CEO, Mike Ferguson commented, “With the second and last payment having been made in trust for the two leases at Vanguard pursuant to the terms of the asset purchase agreement with YCR and the off-take agreement negotiations proceeding well, it is time to accelerate efforts in anticipation of the acquisition and subsequent development of Vanguard. This financing will accomplish that and will take us one step closer to our company goal of becoming a new, independent potash producer using our up-to-date, efficient and environmentally friendly mining and processing techniques”.
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